A star analyst with Citic Securities is being investigated for disclosing inside information about Livzon Pharmaceutical Group through a mobile messaging communication service, in the latest sign that the mainland securities regulator is stepping up policing of the stock market.

On June 6, Zhang Mingfang told fund managers and industry officials about Livzon's pending equity incentive plan in several chat groups through WeChat.

The China Securities Regulatory Commission has launched a probe into Zhang's behaviour.

A Citic Securities official told the South China Morning Post that Zhang was suspended from her duties to assist the probe.

The CSRC has yet to reply to the Post 's written inquiry about the case.

Livzon, listed in Shenzhen and Hong Kong, said in a statement board secretary Li Rucai had resigned for personal reasons, without elaborating. Neither Zhang nor Li could be reached for comment.

The company also said it had delayed the implementation of the incentive scheme to protect shareholders' interests.

"This case will push the regulator to strengthen oversight on the market," a source close to the CSRC said. "The regulator has been aware of malpractices involving leaks and improper sharing of firms' inside information."

On the mainland, fund managers and star analysts with powerful brokerages are described as "in-the-know sources" as they can access information on companies' major deals and decisions before public announcements.

Some employees take advantage of the information to make a quick buck on the stock market. The regulator had been turning a blind eye to the practice over the past two decades. But CSRC chairman Xiao Gang has made clear his determination to weed out market irregularities since taking office in March last year.

The regulator is now waging a nationwide campaign to expose unethical fund managers, who use relatives' accounts to trade shares.

With the CSRC vowing zero tolerance on illegal practices, fund managers have become increasingly self-disciplined.

Several fund managers informed by Zhang of Livzon's incentive scheme publicly complained that the improper release of information on chat groups would eventually embroil them in regulatory investigations.

"It is obviously not a one-off case," Shanghai-based hedge fund manager Dong Jun said. "Sharing inside information among company executives and fund managers is not unusual."

In 2008, a case involving Hangxiao Steel Structure exposed the insider trading problem to the public, with three people, including two senior company officials, jailed. That was the first time officials of a listed firm were jailed for such an offence.

This article appeared in the South China Morning Post print edition as Star analyst probed over disclosure